States Look To Curb Retiree Benefits

State and local governments are starting to take aggressive steps to reduce the enormous cost of providing health care benefits to retired teachers, police officers, firefighters and other public workers.

As 43 state legislatures prepare to convene next month, governments are cutting benefits, setting aside money to cover future costs and shifting expenses to the federal Medicare program. The efforts are the first to address a liability of more than $1 trillion for providing medical care promised to about 25 million current and future retired state and local civil servants.

The changes are being driven by a new accounting rule, which took effect Friday and forces states and large local governments to report how much they owe for medical benefits promised to retirees.